How To Become A Trader
Written by: smm
In our previous posts, we mentioned that the way people trade varies from person to person. There are a bunch of different trading approaches, strategies, and areas of expertise.
There is no one-size-fits-all solution here. However, there are several steps every trader needs to complete.
1. Deciding on the market and trading style
For starters, you need to figure out what type of assets—currency, securities, or commodities—you are going to trade. The newbies who are only getting started should check out forex as you can trade there with a relatively small amount of money. At the same time, you’ll be able to learn the ropes of technical analysis, learn how to read the charts, and make trades. Once you have some experience, you can try your hand at other markets. Aside from that, you have to decide which time frames you will trade on, and what type of analysis you’ll use to evaluate the market situation along with the pros and cons of the decision you are about to make.
2. Picking the broker
Due to the nature of the financial markets, you will need the assistance of the broker to access official trading platforms. Choose the broker based on reviews, reputation, rates, and additional services it offers. Plus, make sure it has relevant licenses.
3. Learning how to trade
You can find basic training courses on the websites of brokerage companies. This help make sense of trading lingo, financial news, and market analytics.
4. Practicing with a demo account
When getting started, it’s important to explore and master trading terminals without using real money. This is what a demo account is for. First, download a trading platform from the broker’s website. Create a demo account and practice picking different assets, enter position volume, and keep an eye on profits and losses.
5. Choosing the strategy
Previously, we have already covered the most common trading strategies. To choose the one that’s right for you, you must factor in your personality and character traits. What works for others may not necessarily work for you.
6. Opening a live account
Traders recommend you deposit enough money so that your risk doesn’t exceed 2% of your trading deposit. For instance, if you risk a hundred dollars, your account balance should be at least $5,000. This will help you be more comfortable with the idea of inevitable losses.
7. Making real trades
To have a conscious trading approach, it makes sense to keep a trading log where you should enter the market entry and exit points, the values of your stop loss and take profit, and your trading outcome, i.e. whether you received a loss or made a profit.
By completing the above steps, the trader will have every chance to succeed in the stock market!